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Rutgers Casualty Insurance Co. v. Lacroix

February 5, 2007


On appeal from Superior Court of New Jersey Law Division, Camden County, Docket No. L-2776-04.

The opinion of the court was delivered by: Holston, Jr., J.A.D.



Argued December 12, 2006

Before Judges Lisa, Holston, Jr. and Grall.

This is an insurance coverage case. Defendant, Chrissy LaCroix (Chrissy), sustained serious personal injuries in a July 10, 2003 automobile accident. She was driving a vehicle owned by her father, Robert LaCroix (Robert), and insured by plaintiff, Rutgers Casualty Insurance Company (Rutgers). She had her father's permission to drive the car. Chrissy appeals from the Law Division's March 1, 2006 order, entered after a bench trial, denying her the right to receive Personal Injury Protection (PIP) benefits under the personal automobile policy issued by Rutgers to Robert. We reverse.

The facts, which were established in the bench trial, are not in dispute. On August 8, 2002, Robert completed and signed a Rutgers personal automobile insurance application for liability, PIP, medical payments, and uninsured motorist insurance coverage. Robert listed himself as the applicant and 15 B Pacific Drive, Winfield, as his residence. Page one of the application contained a block for the applicant to list "ALL LICENSED and UNLICENSED individuals permanently and/or temporarily residing with applicant." Robert listed two of his daughters, Glenda and Maria. However, Robert failed to list Chrissy as a licensed driver permanently residing with him. Chrissy, who was age eighteen and Robert's youngest daughter, was living with him at the time of the application. The insurance application also contained a section highlighted in red, titled "Applicant's Statement," which in applicable part confirmed that Robert had listed all permanent residents of his household and acknowledged Robert's understanding that this information was a material representation relied upon by Rutgers in determining whether to insure him. On the same date, Robert signed and furnished to Rutgers a document entitled "Confirmation," in which he acknowledged his understanding that the insurance application required him to list all permanent residents of his household. Relying on Robert's representations in the application and confirmation, Rutgers issued a personal automobile policy for one year, effective August 16, 2002 to August 16, 2003.

In 2003, Chrissy drove Robert's car two to three times a week. It is undisputed that Chrissy had no part in or knowledge of her father's failure to name her in the application as a licensed driver permanently residing in his household.

After Chrissy's July 10, 2003 accident, a claim for PIP benefits was filed on her behalf with Rutgers. During Rutgers' investigation of Chrissy's claim, Robert admitted in a statement he gave to an insurance company investigator that he did not list Chrissy on the policy application "to keep the cost down." According to the testimony of a Rutgers' senior underwriter, the policy premium would have increased by approximately $500 if Chrissy's name had been disclosed.

As a result of Robert's misrepresentation, Rutgers filed a complaint seeking that the policy be declared void ab initio, thereby negating any liability of Rutgers to pay PIP benefits on behalf of Chrissy. Chrissy, contending that she was an innocent third party entitled to benefits under Robert's policy, counterclaimed for payment of her medical bills pursuant to the PIP coverage contained in her father's policy.

N.J.S.A. 39:6A-4 mandates that

Every standard automobile liability insurance policy . . . shall contain personal injury protection benefits for the payment of benefits without regard to . . . fault of any kind, to the named insured and members of his family residing in his household who sustain bodily injury as a result of an accident while occupying . . . or using an automobile . . . and to other persons sustaining bodily injury while occupying . . . or using the automobile of the named insured, with permission of the named insured.

In Palisades Safety & Insurance Association v. Bastien, 175 N.J. 144, 147-48 (2003), the Supreme Court stated the legislative underpinnings of N.J.S.A. 39:6A-4:

The Legislature provided for PIP benefits as part of New Jersey's no-fault compulsory automobile-insurance system in the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35 (the Act). Since their enactment in 1972, PIP statutory benefits are a required component of every standard automobile insurance policy, and provide an efficient system of "recovery for losses sustained in automobile accidents." Stated generally, the benefits include payment of medical expenses, without regard to fault, for the named insured and resident ...

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